Investors eye new listings as 10 players control 54% of NGX’s N63tr 

• Dangote, Rabiu, Elumelu, Otedola top list
• Operators seek policies to broaden participation, cite risk of market manipulation 

In seemingly worsening concentration risk in the stock market, companies controlled by 10 individuals hold 54 per cent of the Nigerian Exchange Limited (NGX) capitalisation, which closed at N63 trillion yesterday.

Controlled by high-networth individuals, the top 10 capitalised firms are valued at N35.7 trillion or 57 per cent of the total market capitalisation. Only the top three – Dangote Cement, BUA Foods and MTN Nigeria – also account for 31 per cent of the market, suggesting a growing concentration effect in the market. Among the top 10 firms currently enjoying value from the investment market are BUA Cement, Geregu, Transcorp, Aradel, Zenith, GTCo and FBN Holdings.

The growing mega listing may increase the dominance of these investors. Last year, Aradel, which is currently the seventh most capitalised at N2.6 trillion was listed. Dangote Refinery, which is speculated to be the next big listing, may soon be listed to add to the list of overwhelmingly large, quoted companies.

With more big firms trading on the bourse, there are fears that an increasing number of investors would be dumping the penny stocks to take a position in the large stocks for fear of missing out (FOMO), in which case the trend could trigger a crowding out effect and see fund flowing to where the mega-rich Nigerians play.

This could increase the financial fortune of wealthy citizens with a significant decaying effect on penny stocks held by retail investors and worsen the fortune of ordinary investors.

Last year, the Nigerian stock market posted one of the highest gains. With the emerging melting of penny stocks, much of the capital gains were pocketed by less than a dozen Nigerians who control tier-one companies with over 50 per cent of the market capitalisation.

The key indicator, the all-share index, which measures the performance of listed equities, soared by 37 per cent, trailing the 47 per cent high recorded in 2013.

The index closed the 2024 financial year at 102, 926.4 points from 74, 773.77 points at which it opened trading on January 2, 2024, representing 37 per cent growth.  Similarly, market capitalisation gained N22 trillion to close at N62.76 trillion from N40.92 trillion.

However, data by the NGX showed that 10 market ‘makers’ benefitted from much of the capital gain via their stakes in the companies. The individuals have consolidated control across diverse sectors, raising questions about the impact of the concentrated wealth, corporate governance risk and the future of one of Africa’s largest stock exchanges.

The identities of these influential figures reveal a mix of seasoned entrepreneurs and industrial magnates as their holdings span banking, telecommunications, oil and gas and fast-moving consumer goods (FMCG).

Top among the key players that collectively represent this substantial portion of the NGX’s total market capitalisation are Abdul Samad Rabiu, Aliko Dangote, Tony Elumelu and Femi Otedola.

Others are ABC Orjiakor and Austin Avuru, Fola Adeola, Jim Ovia, Aigboje Aig-Imoukhuede and Mike Adenuga. A breakdown of their investments in the country’s bourse showed that Abdul Samad Rabiu’s strategic expansion and operational efficiency in managing BUA Cement and BUA Food Industries have bolstered the market capitalisation of his companies, positively impacting the NGX.

As of the last trading day in 2024, BUA Cement and BUA Foods’ market capitalisation hit N3.1 trillion and N7.4 trillion, totalling N10.5 trillion. The figure represents 16.7 per cent of the overall NGX market capitalisation.

Similarly, Dangote’s significant stake in Dangote Cement, Dangote Sugar Refinery and National Salt Company of Nigeria (NASCON) remains a cornerstone of the NGX. The combined market capitalisation of the three listed firms hit N8.5 trillion last trading day in 2024, constituting about 13.5 per cent of the overall market capitalisation.

For Tony Elumelu, his strategic investments across banking, energy, and hospitality sectors have significantly boosted his influence on the NGX with United Bank for Africa (UBA), Transcorp, Transcorp Power, United Capital, African Prudential and Transcorp Hotel recording a combined market capitalisation of N6 trillion.

Also, Femi Otedola’s investment in Geregu and FBN Holdings closed at N4.2 trillion market capitalisation while Seplat Petroleum, where Dr Ambrosie Bryant Chukwueloa Orjiakor and Austen Avuru hold substantial stakes, closed with a market capitalisation of N3.4 trillion at the end of 2024.

In addition, Fola Adeola and Jim Ovia’s substantial investments in GTCo Holdings and Zenith Bank also consolidated their dominance in the financial services industry. While GTCO’s market capitalisation rose to N1.7 trillion during the period, Zenith Bank’s contributions stood at N1.4 trillion.

The combined market capitalisation of Access Corp and Coronation Insurance also rose to N900 billion while Conoil, a company majorly owned by Adenuga, stood at N268 billion within the same period.

The combined market value of companies led by the identified individuals exceeded N34 trillion or 54 per cent of the market. The companies were among the top gainers last year, which increased the economic worth of the individuals substantially. Most of the companies performed above average market gain.

For instance, BUA Foods is among the top five companies that recorded the highest year-to-date (YTD) gain on the NGX. The leading FMCG firm closed its last trading day at N415, up from N193.40 kobo recorded at the reopening of trading in 2024, adding 108 per cent on the price valuation.

Transcorp closed its transaction for the year at N43.50 kobo from N8.66 kobo at which it reopened for transactions at the beginning of the year, leading to over a 400 per cent gain, making it fifth on the NGX in terms of performance in 2024.

Geregu closed its last trading for 2024 at N1,150 higher than the N399 recorded at the beginning of the year, returning a 188 per cent gain to investors.
Coronation Insurance began the year with a share price of 68 kobo and has gained 150 per cent to close the 2024 financial year at N2.25 kobo.

Conoil share price also rose from N83.90 kobo to N387.20 kobo, adding a 362 per cent gain to shareholders. Indeed, the NGX has attracted substantial investment to the market since the beginning of 2024, but the growth favoured a handful of well-established players.

For instance, foreign investors’ transactions on the Nigerian Exchange Limited (NGX) reached a total of N744.34 billion in the first 10 months of 2024, which was a 156 per cent year-on-year (YoY) increase when compared to the N291.38 billion recorded in the first 10 months of 2023.

The breakdown showed that domestic retail transacted N1.9 trillion in the first 10 months of 2024, as against N935.78 billion recorded in the first 10 months of 2023, while domestic institutional transacted N1.8 trillion in the same period, up from N1.706.23 trillion in the same period in 2023.

The Guardian learnt that high-networth individuals have continued to directly or indirectly intervene in the pricing of their stocks to boost their valuation.

Market analysts also link their interest in growing their wealth through capital gain to their interest in topping the Forbes list. Operators argued that certain regulatory policies may have unintentionally increased the dominance of tier-one investors.

According to them, while the investors have contributed significantly to the NGX’s growth, the concentration of wealth among a few raises systemic risks.

Specifically, they warned that such dominance could stifle competition, reduce market liquidity and increase the risk of manipulation.  Head Equity, Planet Capital, Dr Paul Uzum, said the negative impact is that the stocks may rise on their own based on the interest of their major shareholders – a possibility that does not mirror market sentiment.

“So, in a year like 2024 where the liquid segment of the market (where the majority of investors stake their wealth) notably the banks have done 16 per cent, the general market index was 37 per cent up,” he said.

An independent investor, Amaechi Egbo, said the development is contrary to the regulator’s desire to build an inclusive market.  He stressed the need for policies that encourage broader participation in the capital market.  Egbo added that diversifying the market to include more mid-cap and small-cap companies is critical to long-term sustainability.

“As Nigeria’s financial market continues to expand, the dominance of these 10 individuals underscores the interplay between wealth concentration and economic growth. Balancing the contributions of these titans with policies that encourage wider participation will be essential for the NGX’s future.”

A member of the Exceptional Shareholders Association of Nigeria, Olugbosun Ariyo, said a situation where few individuals control up to 50 per cent, could hurt the market.

“This concentration of power can lead to market instability, reduced diversity, and increased price fluctuations, ultimately posing a risk to the overall health of the market.

“The individuals in question will always have their way against the minority when decisions that concern the firm are to be approved at statutory meetings,” he said.